In-House Payroll or Payroll Service?

This is a genuine dilemma with no straightforward obvious answer. Here are the main points that should be considered:

  1. Does a payroll service save time?
    • Employers still need to maintain employee records, PTO, accruals, and deductions on any system. This work does not go away with a payroll service.
    • Payroll services do not offer a payroll rules engine. If your organization has pay differentials, holiday pay, overtime, etc. these may not be automated and can be very time consuming to manage.
    • If processing payroll in-house, allow extra time for tax filings and payments.
  2. Is it cheaper to process payroll in-house?
    • Depends. The cost of running payroll in-house is much lower than using a payroll service, but if your organization needs to hire an extra person or pay overtime, then the savings may be minimal. If your existing staff can handle the extra work, mainly tax filing, then the savings can be significant.
    • Payroll services charge by employee or transaction. If your employees are paid minimum wage, are part time, or are paid sub-minimum wages under a Section 14(c) Subminimum Wage Certificate Program the proportion of the fees to payroll is relatively high.
  3. Cash flow
    • Payroll services require the money to be deposited early. With in-house payroll, the money does not leave your bank account until the direct deposit is released, or the employee cashes a paper check.
    • Payroll services take the taxes out each pay period including the employer taxes. With in-house payroll, the money does not leave your account until the taxes are paid.
  4. Direct Deposit
    • Direct deposit is supported by in-house payroll and payroll services.
    • With in-house payroll, the money can leave your bank account later.
  5. Tax Filings
    • Filing your own taxes takes time and has liability, as the filings must be done. However, many organizations do so.
    • If your organization only operates in one state, filing taxes is relatively straightforward. Filing in multiple states is more complex, even if there is only one employee in a state.
  6. Integration
    • MITC Payroll eliminates the need for Employee Imports and Timecard Exports. Payroll and Timecards are matched up, providing a tight audit trial. The employee check stub automatically displays in myMITC self service.
    • Payroll services often charge extra for General Ledger integration and do not always offer the flexibility in-house payroll does.
    • 401(k) and HSA filings are the same. Payroll services charge extra and may not do a very good job.
  7. Time and Attendance closings
    • Payroll services require the payroll to be processed earlier than with in-house payroll. This can have a knock-on effect on how much time managers and supervisors have to approve time and attendance, and payroll to audit time and attendance. The less time, the more likely the work will be rushed and not done in sufficient detail.
    • If a supervisor or manager needs to delay a time and attendance approval for part of any employee’s time and attendance, doing a “make up” payroll a few days later can be more complicated with a payroll service.

Provider Implements DailyPay to Boost Employee Retention

As the aging population continues to grow, so does the need for care services. But supply isn’t keeping up with demand when it comes to the caregivers required to provide those services, creating unrivaled competition for workers.

To win over prospective employees, providers must differentiate themselves. For BrightSpring Health Services, that means offering daily pay to service providers, whose profession is often characterized by low wages.  

Is semi-monthly or bi-weekly payroll a thing of the past? Traditionally agencies only paid employees 24 or 26 times a year because the payroll process was so complicated. Now with fully automated time and attendance systems that eliminate the costs and risks of paper time sheets and integrate tightly with payroll, that concern may be misplaced.

“Traditionally in our organization, we’ve paid people in a semi-monthly cycle, and that’s the way we’ve always done it,” Rexanne Domico, president of services and neuro rehabilitation at BrightSpring. “The idea really came up when we started talking about how do we pay more frequently? How can we crack that code?”.

Louisville, Kentucky-based BrightSpring, which was formerly known as ResCare, is one of the largest providers in the United States employing over 20,000 caregivers, Domico said.

“The problem sometimes for this workforce is the ability to access pay when they need it,” she said.

With one in four caregivers living below the poverty line, that could discourage prospective caregivers and force them into different, more short-term lucrative lines of work. For example, candidates could receive immediate money waiting tables or earn higher wages working for Amazon, which raised its minimum wage for all employees to $15 last year.

“We fully believe that the companies able to attract and retain caregivers are the companies that are going to see the growth in the coming months and years in the space,” Domico said. “The ability to solve [for pay challenges] for this workforce is … a huge answer to this problem.”

Digging Into Daily Pay

BrightSpring began exploring its daily pay initiative about a year ago. The program, which is called “Pay Out,” went live at the end of 2018. It allows employees across the organization — not just caregivers — to access pay as it’s earned.

Already, about 9,000 employees are using Pay Out, Domico said, and the program is achieving what it’s meant to: attracting employees and improving retention.

“We are seeing a lot of interest when we’re talking with our applicants about Pay Out,” Domico said. “We see caregivers saying they’re picking up additional hours because they can get paid for those hours quicker than working somewhere else. We also see some early impact on retention with the people who are engaging in daily pay.”

New York City-based DailyPay, a financial solutions company, helps BrightSpring provide the benefit to employees.

DailyPay serves a number of companies in the health care space, including home-based care providers, such as BrightSpring and Menlo Park, California-based home care provider Care Indeed. Vera Bradley, Sprinkles Cupcakes and hundreds of other companies are also clients.

“It is not uncommon for a home healthcare company using DailyPay to see 30% to 50% of its caregiver population enrolled in this benefit,” DailyPay CEO Jason Lee  “These same companies have seen on average a 50% reduction of annualized turnover among the population of DailyPay users. The story is very clear: DailyPay is a benefit that caregivers are willing to stay for.”

To take advantage of daily pay, caregivers must first download an app on their phones. After employees complete a shift and BrightSpring confirms the hours, workers can access their wages immediately. When payday comes around, employees are given the remainder of their paycheck.

“It’s very new for us, so some of the results are pending, but I think what’s important in highlighting the program is just the actual determination to do something that’s different and see what the results are going to look like,” Domico said. “Through doing that, we’re likely to be able to attract more people to work, which attracts more opportunity for different types of contracts and relationships with different payers. That’s really what we’re after.”

“DailyPay is a no-cost to the employer benefit,” He said. “It is free to enroll into the service, and there is only a fee when an employee transfers money on the platform. There is a flat ATM-like fee of $1.99 for next day transfer or $2.99 for an instant transfer. This is usually employee paid, but it can be employer subsidized as well.”

Meanwhile, for BrightSpring, daily pay is a commitment to both industry disruptors and caregivers.

“You can either spend more money trying to attract and retain caregivers — or you can just try to do it better,” Domico said. “That’s where we really landed.”

Daily pay also requires real time attendance. Employee hours can be approved daily, processed into payroll and marked paid. Disputed hours can be withheld and paid later.

To learn more about real time attendance, download the fact sheet on myAttendance.

Download the Fact Sheet

Fair Scheduling Trend Could Spell Trouble for Providers

Fair Scheduling Trend Could Spell Trouble for Providers

In recent months and years, retention and rising payroll costs have been a major concern for providers. However, fair scheduling legislation is gaining steam in cities and states across the country, and could soon be an equal issue — potentially making matters more complex.

Fair scheduling legislation varies across the country, but generally, the rules mandate employees must receive:

  • Set work schedules a certain number of days in advance
  • A certain number of rest hours in between shifts

If employers don’t meet requirements, they must pay workers a premium rate. This stipulation could be very difficult for providers to manage in HCBS programs where clients set their own schedule, or in group homes where staff call off at the last minute and a replacement has to provided

In California, workers who earn the minimum wage per hour are entitled to additional pay known as a “split shift premium” when their schedule includes a split shift. The premium is equal to one hour of pay at the rate of the minimum wage. An employee who is paid more than minimum wage may also be due a split shift premium, however, the greater the wage the lower the premium will be.

In some states and cities with fair scheduling laws, the rules only apply to certain industries, such as retail, hospitality, and food services. Some examples include the state of Oregon, along with the cities of San Francisco and Seattle. Vermont includes providers in fair scheduling laws.

In Chicago, a fair scheduling ordinance is being considered that casts a wide net. If passed, it would require employers to give their staff a written notice of their schedules two weeks in advance, and require workers at least 11 hours of time off between shifts. Schedule changes, or inability to meet these requirements, would require employers to pay workers premiums.

mySchedules includes software to comply with FAST (Fatigue Avoidance Scheduling Tool) developed by the US Army and deployed by the federal government. To learn more about mySchedules, download the fact sheet

Pennsylvania EVV Update

DHS recently published some more, but limited, information on EVV.

Which programs are impacted?

Providers serving participants in the OBRA waiver or Act 150 program must adhere to all timelines and guidance issued by DHS in order to comply with EVV requirements in the fee-for-service system. 

Few details available

The Department of Human Services (DHS) is moving forward with a “soft implementation” in September of 2019. DHS will provide more updates as DHS moves through this process. Providers using MITC as their own internal EVV system will be able to interface with the DHS EVV aggregator system but DHS has not yet issued implementation details. 

Pennsylvania has confirmed providers will be able to use their own EVV system and submit information to the state’s EVV vendor. The Department of Human Services is using the existing PROMISe™ fiscal agent contract with DXC for EVV.

This “open” route is the one most states are taking as providers need the flexibility to use a system that best fits their business model to benefit from the potential productivity and billing gains from EVV. Smaller providers or providers with straightforward needs may find they can use the Department’s EVV system for compliance. However based on provider experience in other states, state systems tend to be limited and cause more work.

Many Pennsylvania providers are already using Agency Workforce Management for EVV. For more information on myAttendance for EVV/HIPAA compliance, download the fact sheet below.

U.S. Department of Labor - Managing FMLA

New DOL Guidelines for Vocational Programs

Wage and Hour Updated Guidance for 14(c) Certificate Holders

The U.S. Department of Labor’s Wage and Hour Division (WHD) has published three documents providing guidance on the payment of subminimum wages under section 14(c) of the Fair Labor Standards Act (FLSA). The first two are related to the impact of Rehabilitation Act section 511 and the third provides general guidance on the administration of section 14(c).

Field Assistance Bulletin (FAB) No. 2019-1 concerns the definition of subminimum wages under section 511 and WHD’s enforcement of the limitations on the payment of those wages under section 14(c).  Fact Sheet #39H: The Workforce Innovation and Opportunity Act and Limitations on Payment of Subminimum Wages under Section 14(c) of the Fair Labor Standards Act. The revisions include information on the definition of subminimum wages and timing requirements under section 511, as well as two charts to provide visual summaries for determining when and to whom the specific section 511 requirements apply. 

The fact sheet also cross-references readers to the related regulations issued by the U.S. Department of Education. Fact Sheet #39I:  Adjusting Commensurate Wage Rates under a Section 14(c) Certificate After a Change in the Minimum Wage, provides guidance on taking appropriate action to ensure prevailing wage rates are timely examined and adjusted, and the workers’ commensurate wage rates correspondingly adjusted, as needed, when there is an increase in the federal, state, or a locality’s minimum wage requirements.

Download the fact sheet for more information on how myClients can help providers managing day and vocational programs.